Schools, roads, taxes in Corbett's budget plan

Protesters demonstrate before Gov. Tom Corbett delivers his budget proposal for the fiscal year 2013-2014 to a joint session of the Pennsylvania House and Senate on Tuesday, Feb. 5, 2013, in Harrisburg, Pa. (AP Photo/Matt Rourke)

HARRISBURG — An ambitious budget proposal released Tuesday by Gov. Tom Corbett would boost Pennsylvania’s core state government spending by nearly 3 percent while increasing support for public schools, cutting business taxes and counting on the Legislature to adopt long-term changes to public pensions.

The Republican governor’s third annual budget plan takes the risky legal and political strategy of assuming that his proposed pension changes are approved by lawmakers, saving hundreds of millions of dollars a year right away. In addition, Corbett, as expected, called for an increase on wholesale gas taxes to come to the rescue of the state’s highways, bridges and mass transit systems.

“Now is not the time to be timid in our approach,” Corbett said in the text of his speech. “Now is not the time to cling to old ideas and the status quo. Now is not the time to make small changes and expect big results. Now is the time to be truly innovative. Now is the time to embrace new ideas. And now is the time to be bold. Pennsylvanians deserve this from us now.”

Overall, the budget for the fiscal year 2013-14 would set spending at more than $28.4 million while boosting spending in the current fiscal year by about $100 million. Corbett expects revenue to rise by a relatively meager amount, 1.5 percent compared with this year’s 4 percent, and he would plow more than $500 million in reserves into his spending plan. He would not increase Pennsylvania’s broad-based taxes on sales or income, although he would seek to cut business taxes by hundreds of millions of dollars.

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The biggest increases in the approximately $800 million in new spending would come under education, health care for the poor, social services and prisons.

Corbett has warned that he might have to cut aid for crucial programs, such as public schools, unless his plan to change public pensions is adopted. The changes would allow him to spend hundreds of millions of dollars for other programs in his budget plan, but it’s a tactic that is already being questioned by top Republicans who control the Legislature, and public employee unions have threatened a lawsuit.

Public schools would see an increase of $90 million, or more than 1 percent, while funding for higher education would remain level. Many other agencies and programs would see small increases, while Corbett’s budget plan also expects to see the ranks of state employees shrink by 900.

Corbett, who pledged not to raise taxes when he ran for governor, wants to phase-in higher wholesale fuel taxes over five years, while partially offsetting the increase to consumers by peeling two cents off the per-gallon taxes that motorists pay at the pump. His transportation plan would raise $5.3 billion over the first five years, the governor’s office said.

On business taxes, Corbett would end the capital stock and franchise tax, increase the amount of net operating losses businesses could carry forward from $3 million to $5 million and begin in 2015 a long-term reduction of the corporate net income tax from the current 9.99 percent to 6.99 percent.